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Explorer quarterly cash update

October 2018

BDO’s report on the cash position of Australian-listed explorers for the June 2018 quarter (based on quarterly Appendix 5B reports lodged with the ASX) indicates that the natural resources sector in Australia is continuing to build momentum, with both investors and exploration companies exhibiting a bullish outlook. This was highlighted by a 58% increase in financing inflows for the quarter to reach $2.14 billion, and exploration companies increasing spending across the board.

Exploration expenditure increased by 15%, from $366 million for the March 2018 quarter to $420 million for the June 2018 quarter. This represents the second highest spend on exploration during a single quarter since March 2015. The Australian Bureau of Statistics also reported that metres drilled by exploration companies increased by more than 44% for the June 2018 quarter. Net investing cash out flows increased by 44% from $411 million for the March 2018 quarter to $592 million for the June 2018 quarter. The increase in investing activity demonstrates a growing confidence amongst explorers in their ability to realise attractive return on investment in the sector. Furthermore, the number of ASX listed exploration companies to lodge Appendix 5Bs continues to exhibit an upward trend, increasing for the second consecutive quarter, from 702 to 705.

The positive industry sentiment displayed during the June 2018 quarter was not isolated to exploration companies, with a number of large producing companies committing significant funds to development and expansion strategies.